Flexible and offset mortgages
Flexible and offset mortgages allow you to make overpayments to shorten the length of the mortgage repayment term. Flexible mortgages also allow you to make underpayments and take payment holidays with no extra charges. A flexible and offset mortgage can be very useful for the self employed or borrowers who have fluctuating income.
Some flexible and offset mortgages allow you to borrow back the overpayments you have made. It is quite common for interest to be charged daily on these types of mortgages. A flexible mortgage may not always offer the best rates, so in effect it is likely that you will be paying a premium for the benefit of the flexibility.
Offset mortgages can be quite complicated but if you use them effectively they can be of real benefit. Basically, offset mortgages put your money into a virtual pot, pulling all of your money together. So, if you owe £80,000 on your mortgage, paying interest at five per cent but also have savings of £20,000 earning two per cent interest, the offset calculates that you owe £60,000 and charges interest on that. Because typically mortgage interest costs more than you earn on your savings it is a good method of saving money on your overall finances.
- Barclays unveils new flexible and instant cash ISA options
- Offset mortgages: How to link your savings to your mortgage
- More people 'discovering benefits of offset mortgages'
- Northern Rock: New flexible mortgages
- First Direct promotes offset mortgages
- Leeds BS launches new offset mortgages
- Chelsea BS offer first-time buyers offset mortgage option
- Clydesdale and Yorkshire Banks bring in lower rate mortgages
- First Direct: New offset mortgages
- First Direct hails offset mortgages